Dozens of providers allowed to skirt cap on subcontracting

Names of 53 providers given special permission to subcontract over 25% limit revealed

Names of 53 providers given special permission to subcontract over 25% limit revealed

More than 50 training providers have been granted special permission from the government to exceed a new cap on subcontracting, FE Week can reveal.

The Education and Skills Funding Agency introduced a rule in 2022/23 that bans providers from contracting out 25 per cent or more of training in any funding stream.

It is part of the agency’s reforms that aim to significantly reduce the amount of subcontracting in FE, in a crackdown prompted by concerns about poor oversight and fraud.

However colleges and providers can secure written permission to exceed the cap if they can show that the subcontracting brings niche or expert provision, better access to training facilities, makes training easier to get to for learners, or offers an entry point for disadvantaged groups.

Following a freedom of information request the agency told FE Week that 53 training providers have been granted exemption from the 25 per cent limit for this academic year.

Among those are 15 colleges, one university and one school. The others are independent training providers, employer providers and charities.

The ESFA did not share figures for the total amount of subcontracted provision for each provider but for those that spoke to FE Week it ranged from 27 per cent to whole programme subcontracting.

Waltham Forest Chamber of Commerce Training Trust Limited, for example, subcontracts 40 per cent of its apprenticeship provision.

The provider’s chief executive Mark Durham said his company has been using this delivery model for over 25 years, which has enabled it to build strong links with employers mostly in the construction sector who highly value the provision.

He told FE Week that it is difficult for employers to find suitable apprenticeship training within the construction sector – a gap that his long-running “expert” provider helps to fill.

Durham said the Training Trust has been reducing the number of subcontractors it works with in recent years – from six in 2016 to just two currently: Building Crafts College and Choice Training.

Subcontracting out a high proportion of apprenticeships was justified because both subcontractors have “excellent” training facilities and “expert delivery” to suit the location of the Training Trust’s learners and employers. Working with these subcontractors allows the provider to offer a more diverse range of construction courses that Durham says boosts employment prospects in local communities.

The Training Trust was graded ‘good’ by Ofsted in January 2022 with inspectors highlighting that regular reviews of apprentices’ progress with subcontractors helped improve achievement rates.

The ESFA has become increasingly concerned that subcontracting is used for financial gain and by colleges and providers to spend their funding allocations before the end of the academic year – something which can lead to poor oversight and student experience.

Excessive management fees of more than 20 per cent have also caused concern, with FE Week reporting cases of individual providers top slicing almost 40 per cent and taking millions of pounds away from frontline training.

FE Commissioner Shelagh Legrave named subcontracting as one of her biggest concerns for colleges in her 2021/22 annual report.

While fears over poor subcontracting have grown the ESFA has made clear it is not “prohibiting or banning” all subcontracting. The agency’s former chief executive, Eileen Milner, told providers in 2021 that “where it is done well, for the right reasons, and properly overseen, it can enhance the learner experience and add value”.

The ESFA’s latest list of declared subcontractors shows £350 million of national skills funding was being subcontracted as of October 2022 – a drop of more than a third of the £560 million subcontracted in 2017.

Subcontracting to reach under-privileged groups

Social justice charity Nacro has been given permission to subcontract 27 per cent of its 16 to 19 study programmes this year.

A spokesperson said the charity works with six long term partners who work in cities and towns “we don’t have a presence in, delivering provision for the same under-represented, under-privileged groups as we reach in our 12 other centres across England for learners studying at level 2 and below”.

“Education census data shows that almost one in five people aged 16-plus have no qualifications. Nacro specialises in helping young people achieve the essential qualifications and vocational skills that they need to progress to their intended next steps. By working closely with trusted organisations in these areas, we can support more learners who need us,” the spokesperson added.

Leeds Trinity University said it has been allowed to go over the 25 per cent threshold for its delivery of the police constable degree apprenticeship.

Claire Newhouse, dean of external engagement and impact at the university, said this is the university’s biggest apprenticeship programme which requires the expertise of West Yorkshire Police.

“As an ‘employer-provider’, West Yorkshire Police supports the delivery of the Degree Apprenticeship, providing specialist input which is professionally relevant,” she told FE Week.

However some of the subcontractors with special permission to exceed the cap this year are scaling back with the aim of going below the threshold next year.

Engineering Trust Training Ltd (ETT), which delivers apprenticeships in engineering, manufacturing and maintenance, said nearly all of its provision will be direct delivery in 2023/24 after opening up a new training academy.

The provider currently subcontracts with local colleges who deliver diploma courses on ETT’s behalf via day release.

A spokesperson told FE Week: “In this case, we do deliver the majority of the apprenticeship directly ourselves and subcontract the minority or the funding we receive. We were given permission to continue as it would have been damaging to the apprentices to change their college provider part way through their diploma course. Moving forward, we have now opened our own training venue, The Engineering Skills Academy in Bicester, to deliver all elements of the apprenticeship ourselves. This will reduce the percentage of our learners subcontracted to colleges with the intention of dropping below the 25 per cent rule.”

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